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Comment by halpert | Hacker News Reader

Then why don’t companies adopt a flatter structure with higher compensated engineers? The goal of a company is to make money after all. If management could be removed and top engineers retained with higher salaries, then a company would surely have an advantage in the marketplace. Since this doesn’t happen, there must be more to the picture than people in upper management simply clinging to their jobs. If removing middle management were so obvious a change to make, then shareholders would demand it.

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> Then why don’t companies adopt a flatter structure with higher compensated engineers? The goal of a company is to make money after all.

Let's not forget that companies aren't real sentient beings, do not really take decisions and do not really have their own interest. They are legal fictions. Trying to understand the behavior of a company based on its self interest can therefore be misleading.

Why do bureaucracies develop? Why is Google launching yet another chat app? Why are so many companies disrupted by new techs instead of adapting? All this is against their interest after all.

Companies are ultimately led and controlled by many individuals, in pursuit of their own individual interest (mostly). Some groups of individuals within a company have more control than others, and will consequently bend the company toward what's in their own interest.

I'm not versed into sociology of organisations, but from a cursory look at some big corp internals it seems to me that this easily explains the frequent growth in numbers and importance of the coterie with the more agency over hiring, regardless of whether it's good or bad for the company as a whole, ie the growth of middle management cancer.

I would be careful with the "if they do it it must be sensible" reasoning. There are a lot of reasons that modeling firms using homo-economicus and perfect markets doesn't pan out.

To me, this is a case to apply Occam’s razor. What is more likely, that this decades old, Dilbertesque criticism of management is true, yet somehow eluded the purview of shareholders? Or that businesses are being run in a relatively efficient manner given the current human condition?

Rules for Rulers is real.

It's not that management is dumb, it's that every layer of management is self-interested. Every hierarchy has to contend with principal agent problems. Organizations can do a better or worse job of it, but the incentives are always there and they lead to predictable inefficiencies which are frequently observed. Everyone knows this, but unless you know how to get someone to manage without self-interest, you aren't in a position to solve the problem. Nobody is. That's why it lingers.

Is self-interested management really an inefficiency if it’s unavoidable? You don’t get to run a company in a vacuum. You have to run it within the bounds of human behavior. Saying that “if only all humans acted in some way against their nature, then the system would be more efficient” isn’t an effective management strategy.

You were arguing that RfR / Dilbert coludn't be true because if it were, it would have been optimized away. I argued that no, just because it happens and is broadly understood doesn't mean that it can be optimized away.

You can play semantic games about whether or not it should be called inefficiency -- I don't really care what you call it -- but the RfR / Dilbert dynamic is very real and very prevalent.

Just because something is good for shareholders doesn’t mean it’s good for non-management employees or society at large.

I never claimed it was. I was replying to a discussion on worker efficiency.

Many start out flat and as they grow they need to introduce middle management.

Middle management becomes necessary.

But the question is around pay. Should they always make more because they sit higher in the org chart?

I would suggest they make more because of power structures not utility or because they are not as easy to replace.

Because of first class shares, senior leadership shares percentages shareholders with a vote are often the people in power. Common shareholders don't hold much power.

this kind of reasoning simply does not follow in the real world. There are many, many cases of some companies out competing others. Why? if they were all rational actors none would have any advantage over the other.

I’m not claiming management structure is the only factor in whether or not a business is competitive. It’s just a factor, and business usually try to optimize the factors under their control to be the most competitive. Of course, there are many factors outside of the businesses control as well.

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